Heat Pump Sector Deal Expert Advisory Group: Scottish Government response

Recommendation 8

The Scottish Government should work with Ofgem and network operators to ensure that neither network capacity constraints nor administrative processes for heat pump connection become a barrier to heat pump deployment.

Scottish Government Response

Responsibility for policy relating to the electricity system and network charging sits with the UK Government and Ofgem, however we continue to work closely with Scottish Distribution Network Operators (DNOs) and Ofgem.

The Scottish Government has worked closely with Scottish DNOs (SP Energy Networks and Scottish and Southern Electricity Networks) on their business planning for the next price control period (RIIO ED2 2023 – 2028). The proposed investments from both DNOs (paid for by all bill payers in each network area), if approved by Ofgem, would support as many as 500,000 heat pumps on the electricity system in Scotland.

The Scottish Government has also set up a new Heat Electrification Strategic Partnership (HESP) with the Scottish DNOs as a forum within which to further develop our understanding of the scale, pace and location of network investment needed. In close collaboration with the DNOs under the umbrella of HESP, we are commissioning work to explore the potential distribution network costs of the heat transition for Scotland. This work should provide greater clarity on the likely range of costs, and likely impacts on consumers, including those in, or at risk of, fuel poverty. The Scottish Government is also engaging with BEIS, Ofgem and the DNOs in relation to network investment considerations as well as UK-wide initiatives in the space of local area planning so that relevant Scottish Government policies, such as LHEES, are taken into consideration.

We have raised our concern with Ofgem that the current approach to grid charging and socialisation of reinforcement costs creates barriers to our decarbonisation targets. Scottish Ministers have written on this issue to the UK Government, and will continue to press for a charging system that works for and not against net zero ambitions. We believe that Ofgem's assessment of the ways in which variations in energy policy across GB are considered must take place in a way which covers devolved government and regional authorities, as well as local government.

The Scottish Government has proposed to the Chief Executive of Ofgem a replacement to the Fuel Poor Network Extension Scheme (FPNES) which would better aligned with net zero goals and our just transition commitment to ensure that vulnerable customers aren't left behind. Specifically, the Scottish Government has asked Ofgem to explore how the FPNES might be replicated in the electricity sector to help fund heat pump connections for fuel poor households as there may be an opportunity here to repurpose the existing FPNES to help assist fuel poor consumers with costs, supporting our shared decarbonisation and net zero goals.